Q Despite recent losses, Blockbuster has deep resources, combining brick-and-mortar stores with online rentals and brand identity. Do those advantages make it an inevitable winner against Netflix?
A I’d like to say they don’t have a chance on the planet, but the reality is they do, and that’s what makes it an interesting battle. They have stores (and) they have a brand that’s known by every American. We’re known pretty broadly and we’re known very well in the online segment, but they have broader branding.
They’re about five times larger than us in (annual) revenue. They’re about $5 billion compared to our $1 billion. So that’s a big benefit also. But we’ve got some assets, too. We’ve got $400 million in cash in the bank and no debt, and they have almost no cash and lots of debt. Their stores are both an asset and a liability, because as people leave stores it starts to be a real problem - what do you do with those leases and those kind of things. And we’re an Internet company through and through.
Our view is that the smart money is that they can’t sustain the battle. . . . Last year they were $251 million of positive free cash flow, calendar year. The first six months year to date, they’re negative $215 million. Big numbers and a big change.
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Tags: Online DVD Rental USA by freedvdtrials.com
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I was concerned that Netflix was going to come in flat on the subscriber-acquisition front during the third quarter. After all, Netflix started the period with 6.74 million subscribers and had a target of 6.7 million to 6.9 million users by the end of September.
